What does a 1% rate rise actually cost?

The important point

A 1 percentage-point rise does not mean your repayment rises by 1%. Your repayment depends on the balance, remaining term and interest rate, so the euro impact can be significant — especially on a large mortgage with many years left.

Example

Imagine a €300,000 repayment mortgage with 30 years remaining. At 3.5%, the monthly repayment is about €1,347. At 4.5%, it is about €1,520. That's roughly €173 more every month, or about €2,076 over a year, before considering any other changes.

Why the term matters

The longer the mortgage, the more sensitive the total cost becomes to changes in the interest rate. A rate change affects every future repayment, so a difference that looks small monthly can become substantial over decades.

Fixed vs variable

A fixed-rate mortgage protects you from changes in the rate during the fixed period. A variable rate can move up or down. Neither is automatically better: the right choice depends on the rate available, your plans, your tolerance for payment changes and the terms of the mortgage.

Why a 1% rise matters

A percentage-point rise does not mean the mortgage payment rises by exactly 1%. The new repayment is recalculated using the higher interest rate and the remaining balance and term. The effect can therefore be significant on a large balance or a mortgage with many years remaining.

The impact is also different for fixed and variable borrowers. A fixed-rate borrower may be protected for the fixed period, while a variable rate can change sooner. Check the terms of your own mortgage before assuming that a rate change will affect you immediately.

Use the example as a stress test

Compare your current payment with a higher-rate scenario and ask whether the difference would still leave enough room for normal household spending and saving. You can then try a second scenario using the mortgage stress-test guide and compare it with the repayment calculator.